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INTRODUCTION

HEAVY ENGINEEIRING COPORATION AT A GLANCE Heavy Engineering Corporation or "HEC" is a Public Sector Undertaking ("PSU") in India. It is one of India's oldest and largest engineering companies. It is the biggest industry of its kind in Asia. HEC is under the Ministry of Heavy Industries, Govt. Of India. Established in the year 1958 as the largest integrated engineering industrial complex in India with excellent design, engineering, and manufacturing base. The company is engaged in the manufacture and supply of capital equipments, machine tools and spares needed for the core sector industries. One of the oldest and largest engineering company of India is Heavy Engineering Corporation. It is commonly known as HEC. It was setup in 1958 by the Government of India under the Ministry of Heavy Industries. It is involved in the manufacturing and supply of capital equipments along with machine tools and spares parts for core sector industries. HEC also go for casting & forging, fabrication, machining, assembly and testing of their own products. It has three units namely-heavy Machine Building Plant, Foundry Forge Plant and Heavy Machine Tools Plant. It is located at Ranchi and is ISO 9001:2008 certified company.

Location HEC is situated near Hatia, in Ranchi, Jharkhand Plants It consists of three units: Heavy Machine Building Plant (HMBP). Set up in Collaboration with erstwhile USSR. Design& Manufactures Equipment and Spares for different Sectors. Heavy Machine Tools Plant (HMTP).Set up in Collaboration with erstwhile CSSR (M/s SKODA).Design & Manufactures CNC & Conventional machine tools in medium & heavier ranges. Manufactures special purpose railway machine tools and reconditions old machine tools. Foundry Forge Plant (FFP) - Set up in collaboration with erstwhile CSSR (M/s SKODA) Manufactures heavy castings & forgings and rolls for hot & cold rolling mills for steel

OBJECTIVES OF THE STUDY


This study program has got the following objectives: To know About HEC,Ranchi To aware about the various plant of HEC Ranchi To know the international scope of HEC Ranchi To know about the marketing study of HEC Ranchi To know about the product manufactured in HEC Ranchi To know about the customers of HEC To know about the competitors of HEC Ranchi To know about the financial condition of HEC Ranchi To know about the SWOT analysis of various plant of HEC To know about where HEC stands in product life cycle.

NEED OF THE PROJECT REPORT


A variety of operations keep businesses, especially large corporations, running efficiently and effectively. Common business operation divisions include (1) production, (2) marketing, (3) finance, and (4) human resource management.

SCOPE OF THE PROJECT Gathering information and theoretical knowledge is a part of study. It becomescomplete when added with practical knowledge as the noted truth comes to sight. Hence one becomes more efficient and effective when a flavor of practical out look is added to the bosky mind. As the study has got wide relevance is formulating valid information about the HEC. The authentic project reports helps us in several purposes Goal setting To get the profitability of the company To implement the rule and regulation in the company To overcome the risks in the company To understand the companys marketing strategy To estimates the financial budgeting of the company and many more

INTRODUCTION
HEC was incorporated on 31.12.1958 under the Companies Act, 1956. The company started production in the year 1964. It was established under the Ministry of Industry with the primary objective of achieving self-sufficiency and self-reliance in the field of design and manufacture of equipment and machinery for core sector, especially steel industries. It was visualized at that time that one steel plant of one million ton capacity will be added every year in India, which however, did not materialize. Consequently the demand for steel making machinery was never as high as it was expected. Hence HEC diversified its area of operation in other core sectors like mining, railways, defiance etc. Currently, the company is engaged in the manufacture and supply of capital equipment, machine tools and spares needed for the core sector industries namely; steel, coal, cement, power, defiance, aluminum, ship building and railways etc. The head office and three plants of the company are situated in Ranchi, the capital of the newly formed state Jharkhand. The company has its offices in New Delhi and Kolkata.

Capital Base:
The authorized capital of the company is Rs.500 cores and the paidupcapital is Rs.453.24 cores.

Existing Plant Facilities, Products and Past Collaborations:


More than 7000 acres of land had been conveyed to the company at the time of its incorporation by Govt. of Bihar for its use. The company has built plants, administrative office and township on this land. The company was set up with the capability to manufacture steel plant equipment that can enhance the steel producing capacity by one million tones per annum. The company has three manufacturing units and one project and consultancy division viz. (i) Foundry Forge Plant (FFP) (ii) Heavy Machine Building Plant (HMBP) (iii) Heavy Machine Tool Plant (HMTP) (iv) Project Division (TKP)

The installed capacity of the plant units is as follows:(i) FFP: 44000 T of casting and forgings (ii) HMBP: 40,000 T of equipment and structures (iii) HMTP: 120 nos. of machine tools.

Details of facilities available, the products and the past collaborators of the plant are as follows:-

FOUNDRY FORGE PLANT (FFP)


The plant was established in collaboration with SKODAEXPORT of erstwhile CSSR and equipped with facilities for melting, heavy and medium casting, all types of forging and machining. Some of the major facilities installed in the plant are as follows:a. b. c. d. e. f. g. h. i. Induction furnaces of capacity 0.5 t, 2t and 3t. Arc furnaces of capacity 5t, 10t, 20t and 60t. Vacuum arc degassing furnace of capacity 60t. Hydraulic forge presses of capacity 6000t, 2650t, 1650t and 1000t. 3t hammer a series of small free forgings hammers and die forging presses. Various ranges of machine tools including one lathe of 53m bed length. Low frequency induction hardening machine for CRM rolls (25 mm depth). Centrifugal casting facility for slender bushes (350 mm dia and 1m long). Horizontal and vertical mist quenching equipment for quality heat treatment, producer gas & oxygen plant

It manufacturers the following products:a. Medium and heavy castings/forgings for coal, defence, railway power and other engineering sector - iron castings weighing upto 100t, steel castings weighing upto 90t, non-ferrous castings weighing upto 1t and forgings weighing upto 20t. b. Rolls for hot rolling mill and cold rolling mill of steel plant. c. Crankshafts for railways. d. Rolling mills, slabbing mills, blooming mills, SG iron rolls etc. In addition this plant has also developed the following critical products:a. Armour plate forging for defence b. Turret castings for defence. c. Propeller shafts for Navy.

HEAVY MACHINE BUILDING PLANT (HMBP)


The plant was established in collaboration with ROMASEXPORT of erstwhile USSR and equipped with facilities for machining, gear cutting, heavy structurals and heat treatment. The plant comprises the following shops:a. Heavy Machine Shop

b. c. d. e. f. g.

Medium and small machine shop Reduction gear shop Block of coke oven shop Heat treatment and forging shop Tools shop Repair shop

Some of the major facilities installed in the plant are as follows:a. b. c. d. e. f. Giant lathe (SOB:4 m, CD:20m) CNC vertical turning and boring machine (job dia, 14m, job weight 250t) CNC plano milling machine (job size 3.5mx7mx2.5m,job weight 120t). CNC Horizontal boring machine (200 mm spindle dia x 18 m col.travel) CNC flame cutting machine (Max job size 25mx6.2m upto 500 mm thick). Gear cutting machine (max job dia 5m, max. module 40mm hobbing).

.The plant designs and manufactures equipment and spares for the following:a. Steel plants. b. Coal/mining equipment viz. 5 and 10 cu.m. rope shovels, hydraulic shovels, draglines, crushers and grinders, material handling equipment etc. c. Aluminium, power, defence, space research and atomic energy etc.

HEAVY MACHINE TOOLS PLANT (HMTP)


The plant was established in collaboration with SKODA of erstwhile, CSSR and equipped with facilities for manufacturing heavy machine tools-both conventional and CNC version. It has also design and R&D wing manned with trained and experienced engineers. The plant is equipped with CNC machine tools, conventional machine tools, induction hardening equipment etc. The plant designs and manufactures equipment and spares for the following: Special purpose railway machine tools CNC & Conventional machine tools in the medium and heavy rang for core sectors and defence like vertical turning and boring machine, roll turning lathe, roll grinding machine, deep hole boring machine, planer, plano-milling machine etc.

For movement of the materials within the plant and uptoHatia railway yard (nearest railway station) HEC has its siding of approx. 100 kms. of railway lines served by its own diesel engines (8 nos.) and wagons (125 nos.). The company has power generating facilities consisting of 4 nos. of DG sets each of 2.8 MW in FFP and 1 no of 3.5 MW of DG set in HMBP as standby arrangement. f Directors

VISION
To be a major Heavy Engineering Company in India providing quality products and services to the Steel, Mining, Coal, Railways and other Strategic Sectors.

MISSION
1. To acquire and maintain leading position as suppliers of quality equipment, spares, systems & services for the Steel, Mining, Coal, Railways and other Strategic Sectors. 2. To make the Revival Plan sustainable 3. To expand business into allied areas and other priority sectors of the economy.

OBJECTIVES
1. GROWTH To attain substantial jump in production and bring about sustained growth to attain production level of Rs.3000 crores by 2011-12. 2. PROFITABILITY To provide reasonable & adequate return on capital employed, primarily through improvement in operational efficiency, capacity utilization & productivity, in order to generate adequate internal resources to finance the companys growth. 3. HUMAN RESOURCE PLANNING & DEVELOPMENT To enable each employee to achieve his optimum potential, improve his capabilities, perceive his role and responsibilities and participate in and contribute to the growth and success of the company. To continuously invest in human resources and be alive to their needs, hopes and aspirations. 4. CUSTOMER SATISFACTION To build a high degree of customer confidence by providing increased value for his money through improved product quality, delivery, performance and customer service. 5. MODERNISATION To upgrade and modernize plants and equipment with the aim of increasing availability of machines/equipment and removing bottlenecks.

6. TECHNOLOGY To achieve technological excellence in operation by development of indigenous technology and efficient absorption and adaptation of imported technologies to suit business needs and priorities with a view to providing a competitive advantage to the company.

Products
Steel Sector Strategic Sector Mining Sector Indian Railways Coke Oven Battery Draglines Electric Rope Shovel (10 Cum) Electric Rope Shovel (5 Cum) Planning Machine Primary Gyratory Crusher Reversible Hammer Crusher Special Purpose Railway Macine Tools Steel Castings-20 Cum Slag Cup Steel Castings-Bottom Housing Of Pinion Stand Steel Castings-Spindle Stand Steel Melting Converters Steel Forgings Vertical Turning & Milling Machine Crane Lathe Continuous Casting Machine Roll Grinding Machine Plano Milling Machine Blast Furnace Deep Hole Boring Machine Forged Rolls Rod Mill Four Roll Crusher Cone Crusher Horizontal Boring Machine Radial Drilling Machine

Contribution to Indian Railways


HEC is a regular supplier of various Machine Tools including Special Purpose Machine Tools for different Railway Workshops, Crank Shafts to DLW, and Varanasi for Diesel Locomotives. Special Purpose Machine Tools supplied to Railways are: Surface Wheel Lathes (Conventional and CNC version) Under Floor Wheel Lathes (Conventional and CNC version) Axle Journal Turning & Burnishing Machine

HEC Future Plans


Castings/Forgings for nuclear power plant in the rane up to 500-1000 MW Fabrication & Machining of various components required for nuclear power plant in the range up to 500-1000 MW. Manufacture of components like: - Reactor Pressure Vessel - Main Vessel/Inner Vessel - Radiation Shield Assembly - Turbine - Shell Forging - Various types of Nozzles etc.

Strengths
Huge Fabrication Facility Special Forging of Nuclear Quality Quality Machining and Heat Treatment Inspection and Testing Skilled Knowledge Base

MAJOR CUSTOMERS
STEEL SECTOR

Steel Authority of India Bokaro Steel Plant Bhilai Steel Plant Durgapur Steel Plant Rourkela Steel Plant Alloy Steel Plant RashtriyaIspat Nigam Ltd Tata Iron and Steel Company Essar Steel Jindal Steel INDOMAG MECON NeelachalIspat Nigam Ltd. Bokaro Bhilai Durgapur Rourkela Durgapur Vishakhapattanam Jamshedpur Gujarat Mumbai New Delhi Ranchi Dubri/Orissa

MINING SECTOR Coal India Ltd. Northern Coalfields Limited Mahanadi Coalfields Limited Eastern Coalfields Limited Bharat Coking Coal Limited Singrauli Sambalpur Sactoria Dhanbad

South Eastern Coalfields Limited Bilaspur Cental Coalfields Ltd. Westen Coalfields Ltd. Hindustan Copper Ltd. Hindustan Zinc Ltd. NMDC Singareni Collieries Company Ltd. Ranchi Nagpur Kolkata Udaipur Hyderabad Kothagudam

Neyveli Lignite Corporation Ltd. Neyveli

DEFENCE SECTOR Ordanance Factory Board Metal & Steel Factory Field Gun Factory Ordinance Factory Ordinance Factory Ordinance Factory Gun Carriage Factory Ordinance Factory Indian Navy MisraDhatu Nigam Ltd. Goa Shipyard Ltd. Mazhgaon Dock Ltd. DRDO Hyderabad Goa Bombay Diff. Units Ichapore Kanpur Kanpur Ambernath Ambajhari Jabalpur Muradnagar

RAILWAY SECTOR Indian Railways Workshops Eastern Zone East Central Zone Central Zone Northern Zone North Central Zone North Eastern Zone North East Frontier Zone North Western Zone South Eastern Zone Southern Zone COFMOW Diesel Locomotive Works Varanasi Jamalpur, Kanchrapara, Lilluah Samastipur Matunga, Parel, Kurdwadi Alambagh, Amritsar, Charbagh Jhansi Gorakhpur, Izzatnagar New Bongaigaon, Dibrugarh, Lumding Jodhpur, Bikaner, Ajmer Kharagpur Trivandrum

Chittaranjan Locomotive Works Chittaranjan

Integral Coach Factory Rail Coach Factory Diesel Loco Modernization Works ALUMINIUM SECTOR Bharat Aluminium Company National Aluminium Company POWER SECTOR Bharat Heavy Electricals Ltd. National Thermal Power Corporation Damodar Valley Corporation

Chennai Kapurthala Patiala

Korba Angul

Diff. Units Diff. Units

Durgapur

Jharkhand State Electricity Board Patratu U.P. State Electricity Board Tamilnadu Electricity Board Lucknow Chennai

OTHER SECTOR Indian Space Research Organisation Vikram Sarabhai Space Centre Variable Energy Cyclotron Centre Sriharikota

Trivandrum Kolkata

Bhabha Atomic Research Centre Kolkata GOVT.MINT Fertiliser Corporation of India Tata Engineering & Locomotive Company Larsen & Toubro New Bongaigaon Refinery Oil & Natural Gas Commission Batliboi TATA Growth Shop Tin Plate Company India Ltd. Mumbai Barauni Jamshedpur

Mumbai Bongaigaon Mumbai Mumbai Jamshedpur Jamshedpur

Tata Yodogawa McNally Bharat TRF Limited TATA International

Jamshedpur Dhanbad Jamshedpur Kolkata

AREA OF BUSINESS
Steel Plant and equipment Mining & mineral processing equipment Machine tools Power Railway Space research application Defence Cement Atomic & nuclear power

CORE COMPETENCY
Eot crane design Various steel plant equipment & component coke Oven blast furnace Converter, rolling mills

Financial analysis
A Memorandum of Understanding has been signed between Heavy Engineering Corporation Limited, Ranchi (HEC) and HMT Machine Tools Ltd. on 09.04.2010 at New Delhi. This joining together of HEC and HMT-MTL will make it, the largest Machine Tools manufacturer in the Country with the capability to design, manufacture and supply a wide

range of machine tools and offer total solution to customers, from smallest to largest machine tools from a single source. Earlier the Jharkhand High Court, on 13.11.2009, had quashed the winding up order and approved revival package of HEC. The considerable improvement in work culture, team building, customer focus, commitment and ability to deliver in time or even ahead of schedule has helped the company for this growth and in getting approval of Govt. for implementation of 50 % DA merger. From a huge loss of 285 Cr. in 2005, it recorded 303.30 Cr. gross turn over with a marginal profit of 2.86 Cr. in 2006. It further increased its profit successively to 4.17 Cr in 2007-08, 18.37 Cr in 08-09, and 26.93 Cr. in 2009-10. Heavy Engineering Corporation, Ranchi turnover Crosses 500 Crore Mark

Financial asssesment
Income statement :Y31 Mar (Rs m) Revenue Operation profit Depericiation Interest expenses Other income Profiy before tax Taxes Minorities & other Net profit 08 23,088 4,276 975 1,006 174 2,468 704 11 1,754 09 29,498 5,137 1,o86 1,422 176 2,806 922 30 1,853 10 27,427 5,916 1,392 1,473 176 3,288 1,061 11 36,491 8,640 1,750 1,310 176 5,756 1,892

2,167

3,864

Balance sheet:Y/e 31 Mar (Rs m) Equity capital Reserves Net worth Minority Debt Debt tax liab (net) Total liabilities Fixed assets Investment Net working capital Inventories Sundry debts Other curr assets Sundary creditors Other curr liab Cash 08 250 9,424 9,674 118 11,375 1,536 22,702 17,410 4 4,567 7,817 3,234 4,233 10,039 677 721 09 250 1,15 11,355 168 16,713 1,306 29,541 26,232 4 2,217 6,513 4,264 3,118 10,875 802 1,088 10 250 12,985 13,236 168 17,315 1,110 31,828 28,904 4 2,635 6,542 3,964 2,919 10,112 678 286 11 250 16,555 16,806 168 15,405 1,221 33,600 29,154 4 3,421 8,703 5,274 3,789 13,453 891 1,021

Total assets

22,702

29,541

31,828

33,600

Cash flow statement :y/e 31Mar (Rs m) Profit befor tax Depreciation Tax paid Working capital Op cash flow Cap expenditure Free cash flow Equity raised Debt financing/disposal Dividend paid Other items Net in cash 08 2,468 975 704 135 2,875 4,606 1,731 478 1,745 293 32 231 09 2,806 1,086 922 2,350 5,320 9,909 4,589 122 5,338 294 211 367 10 3,228 1,392 1,061 418 3,141 4,063 922 7 603 294 196 802 11 5,756 1,750 1,892 787 4,827 2,000 2,827 1,910 2394 111 735

Key ratio
y/e 31Mar(Rs m) Growth matrix(%) Revenue growth Op profit growth EBIT growth Net profit growth Profitability ratios(%) OPM EBIT margins Net profit margin RoCE RoA Per share ratio EPS Dividend per share Cash EPS BVPS Valuation ratio(x) P/E 08 17.5 21.8 26.6 27.6 09 27.8 20.1 21.7 5.7 10 (7.0) 15.2 11.2 16.9 11 33.0 46.0 50.3 78.3

18.5 15.1 7.6 16.7 6.0

17.4 14.3 6.3 16.2 5.0

21.6 17.1 7.9 15.3 5.2

23.7 19.4 10.6 21.6 8.5

7.0 1.0 10.9 38.7

7.4 1.0 11.7 45.4

8.7 1.0 14.2 52.9

15.4 1.0 22.4 67.2

10.8

10.3

8.8

4.9

P/CEPS P/B EV/EBIDTA Payout(%) Dividend payout Tax payout Liquidity ratio Debtor days Inventory days Creditor days

7.0 2.0 6.9

6.5 1.7 6.7

5.3 1.4 6.1

3.4 1.1 3.9

16.7 28.5

15.9 32.9

13.6 32.9

7.6 32.9

51 124 159

53 81 135

53 87 135

53 87 135

Leverage ratio Interest coverage Net debt/ equit Net debt/ op profit 3.5 1.1 2.5 3.0 1.4 3.0 3.2 1.3 1.7 5.4 0.9

Component ratios(%)
Raw material

Power & fuel Staff cost Other op exp

47.7 7.3 7.1 19.4

46.9 6.1 5.8 23.7

43.6 6.6 6.7 21.3

44.8 5.6 5.5 20.4

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